When a good has relatively few substitutes:
A) demand for the good is elastic.
B) monopolists will tend to increase their markup for the good.
C) monopolists will tend to decrease their markup for the good.
D) producers will be able to "steal" all of the consumer surplus from consumers.

Question

Quizplus · Accepted Answer

When a good has few substitutes, consumers have less options to choose from and are therefore more willing to pay higher prices. This allows monopolists to increase their markup for the good and still maintain a significant level of demand. This is known as market power, which allows monopolists to set higher prices than they would be able to in a more competitive market.

When a Good Has Relatively Few Substitutes